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11 Job Costing PDF
11 Job Costing PDF
Lesson Objectives
On completion of this lesson, you will be able to
Job Costing applies to specific jobs undertaken according to customer requirements and specifi-
cations. Tally.ERP 9 enables the tracking of cost and revenue information down to the smallest
detail.
In order to determine the actual costs incurred, every job is assigned a job number or a job name.
Job costing systems determine the costs separately for each product or service, based on the
jobs undertaken.
In a typical job costing environment:
Many non-standard (customised) products/ service are produced/ rendered.
Orders are executed based on customer requirements.
Cost records are maintained for each distinct job.
Costs are traced or allocated to jobs.
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Computer Associates received two orders from SimplyC Solutions to upgrade existing
systems and deliver new systems.
The order details are given in the table.
S.No Order Description Terms of Contract Amount
1. Servicing and Upgrading of Lump sum contract, inclusive of 3,75,000
existing machines. replacement of parts
2. Installing new systems as Rate contract based on requirement 20,000
per specifications of systems
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Other Details
The company has given the servicing and upgrading job collectively to Raj and Archana.
The Service Charges amounts to Rs. 62,500 and Travel Expenses for visits made onsite
are Rs. 25,000
The company has given the job of installing new systems job to Rajesh
Service Charge Rs. 62,500 and Travel Expenses for visits made onsite-Rs. 25,000
The company has a stores godown and regularly purchases items from Reliable Comput-
ers.
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The Parallel allocation of cost to regular cost centres takes place when
more than one cost category is enabled.
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Create a Capital Account under the Capital Account group and enter
Rs.10,00,000 as the Opening Balance for the Capital and alter the Cash
account to a opening balance of Rs. 10,00,000.
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In this lesson, godowns have been created in the names of persons respon-
sible for stock handling.
Create a Dedicated Godown allotted to holding stocks for a default job and a normal Godown,
used regularly and not assigned to any particular job.
Similarly, create the following Godowns with the details given below:
Godown Name Under Allow Storage Default Job Name
of materials
Raj Primary Yes Upgrading Job
Archana Primary Yes Upgrading Job
Rajesh Primary Yes New Systems Job
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Create one new Voucher Type and two Voucher Classes to deal with the scenarios in a manufac-
turing as well as non-manufacturing environment.
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Voucher classes are available when stock journals are not used as manu-
facturing journals. The options available are as follows:
Use class for inter Godown transfers : Create this class to record
transfer of materials from one godown to another.
Use class for Job Costing consumption : Create this class to record
the consumption of materials at godown level.
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8. Press Enter and set Use Class for Inter-Godown Transfers to Yes.
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8. Press Enter. Set Use Class for Inter-Godown Transfers to No and set Use Class for Job
Costing Consumption to Yes.
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Go to Gateway of Tally > Inventory Vouchers > Alt + F9 to view Receipt Note entry screen
1. Press F2 to change voucher date. Type 1-4-2009.
2. In the Party’s A/c Name select Reliable Computers from the List of Ledgers Accounts.
3. Press Enter to view the order details screen and accept the default screen.
4. In the Purchase Ledger field, select Purchases from the List of Ledger Accounts.
5. Select Mother Boards from List of Items.
6. The Item Allocation screen appears. Enter the details as shown below:
Tracking No Godowns Quantity Rate Amount
Select 1 (from List of Track- Stores 12 Nos 3,000 36,000
ing Numbers)
Tracking Numbers
Many businesses deliver stock with a delivery note or a challan and the bill
is raised later. There may be a situation where a bill is raised first and the
goods are delivered against it or the goods are received later against a pur-
chase bill.
In either case, it is important to ‘track’ the delivery or receipt of inventory
against the bill. Tally.ERP 9 provides a facility called Tracking Numbers to
achieve the same.
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If the Bill-wise Allocation screen does not appear then in F12: Configuration set
Use Defaults Bill for Allocations to No.
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Similarly, make an entry in a Transfer Journal, selecting Archana as the Destination Godown
and ensure that the date is 4-4-2009.
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On recording the above entry, the stock available in the godowns decrease.
This value is considered for the consumption of materials during a job work
analysis.
A Manufacturing Journal can also be used to obtain the same result, but in
this, a voucher class cannot be used and the voucher should not have any
output.
Both direct and indirect expenses can be recorded through accounting vouchers by assigning
them to job cost centres.
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6. Select Travel Expenses from List of Ledger Accounts, enter 20000 in the Amount field and
press Enter to view the Cost Allocations screen.
7. Select Upgrading Job from List of Cost Centres.
8. Press Y or Enter to accept the screen.
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Select Primary
Press Alt+F1 to view the Godown summary in detailed format.
In the F12: Configuration, set Show All Items (incl. zero balance) to Yes.
In the F12: Configuration, set Use Common Ledger A/c for Item Allocation to
No.
1. In the Party’s A/c Name select SimplyC Solutions from the List of Ledger Accounts.
2. Press Enter to view the Despatch Details screen and accept the default screen.
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3. Select Sales from List of Ledger Accounts, enter 3,75,000 in the Amount field and press
Enter once to view Cost Allocations for the Sales screen.
4. Select Upgrading Job from List of Cost Centres.
5. In the Bill-Wise Details for SimplyC Solutions,
Select New Ref
Type the Name as SS-1
Enter the amount as Rs. 4,25,000
6. Press Y or Enter to accept the screen.
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i. The stock value remains the same, since there is no consumption involved in
the process of transfer of material. T
ii. he job work analysis will indicate a reduction of stock in the Godown from
which the transfer was made.
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Practice Exercise
Similarly, let us record transactions for New Systems Job.
1. On 7-4-2009, the following components are issued to Rajesh from the stores. This is for the
installation of New Systems for SimplyC Solutions. The details of Stock issued to Rajesh are
given below:
Name of the Item Godown Quantity Rate Value
CPU Stores 15 2,750 41,250
Monitor Stores 15 7,500 1,12,500
Keyboard Stores 15 725 10,875
Mouse Stores 15 250 3,750
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Ensure that the Voucher Type is a Transfer Journal and the Voucher Class is
Transfer.
2. Using the above components, Rajesh produced 15 computer systems on 8-4-2009. A manu-
facturing entry was passed when the components were converted into fully assembled compu-
ter systems for the job.
Go to Gateway of Tally > Inventory Vouchers > Alt + F7: Select the Voucher Type as Manu-
facturing Journal
Enter the details as shown below:
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3. On 8-4-2009, Computer Associates paid Rajesh Service charges of Rs. 31,250 and Travel
Expenses of Rs. 20000.
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4. On 8-4-2009, Rajesh delivered 15 new systems to SimplyC Solutions. The agreed price was
Rs. 20000 per system.
In the F12: Configuration, set Use Common Ledger A/c for Item Allocation to
Yes.
In the Party’s A/c Name select SimplyC Solutions from the List of Ledger Accounts.
Press Enter to view the Order Details screen and accept the default screen.
Select Computers from List of Items and press Enter once to view the Item Allocation
screen for computers.
Select Tracking No: 1 and accept the Item Allocation screen. Ensure that the Item Alloca-
tion screen for computers is as shown:
Godown Quantity Rate Amount
Rajesh 15 Nos 20,000 3,00,000
5. On 8-4-2009, Computer Associates raises a sales invoice of Rs. 3,00,000 at the rate of Rs.
20,000 per system for 15 New systems delivered by Rajesh.
In the F12: Configuration, set Common Ledger A/c for Item Allocation to No.
In the Party’s A/c Name select SimplyC Solutions from the List of Ledger Accounts.
In the Despatch Details screen, select Delivery Note No. 1 and accept the default details.
The Item, Quantity, Rate and Amount fields are updated automatically.
Accept the default Item Allocation screen.
In the Accounting details screen select Sales from List of Ledger Accounts.
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In the Cost Allocation for Sales screen, select New Systems Job.
In the Bill-Wise Details screen, select the New Ref and enter the Name as SS-2. Enter the
amount as Rs. 300000.
Press Y or Enter to accept the screen.
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Go to Gateway of Tally > Display > Statement of Accounts > Job Work Analysis
Press Enter on Consumption
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The Godown Summary viewed through the menu, displays all godowns whereas
the Godown Summary viewed by drilling down from Job Work Analysis report,
displays only the godowns specific to the job.
To view Job Work Analysis report of New Systems Job, Go to Gateway of Tally > Display >
Statement of Accounts > Job Work Analysis
Select New Systems Job
The Job Work Analysis report of New Systems Job appears as shown :
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Similar to the Upgrading Job, the Material Consumption Summary and the Godown
Summary can be viewed, by drilling down the report.
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Accept the Configuration screen to view the summary of Jobs performed for SimplyC
Solutions.
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Points to Remember
Job Costing is evaluating the cost of each specific job order.
Tally.ERP 9 permits you to create a Godown / Location where you need
not store materials but treat it as a virtual godown.
Tally.ERP 9 allows a stock journal voucher type to be used as a manu-
facturing and as a non-manufacturing journal.
A Manufacturing journal voucher type is used to track the list of compo-
nents used, its value and the additional cost of manufacture associated
with each product.
A stock journal voucher type that is not used as a manufacturing jour-
nal, can be used to create voucher classes for the purpose of inter-
godown transfers and for job costing consumption records.
There are two levels of reports generated in job costing viz., Job Work
Analysis and Material Summary Report
A Godown summary displays consumption and other transfer details of
all the godowns.
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